One of the successes in contemporary social science has been the development and proliferation of game theory. For a wide range of phenomena, game theory produces enormous insight into the strategic interaction of individuals. It shows its greatest power in predicting the behavior of large groups of people -- whether this is in the context of markets, political elections, information aggregation or when confronting large-scale social dilemmas. However, game theory also generates predictions for small group behavior that are not corroborated in carefully controlled (and replicated) laboratory experiments. This study investigates how social signaling may help to explain small group behavior. Social signaling involves agents looking for cues about others' intentions and sending cues about their own intentions; these cues in turn build expectations for the behavior of others. This research focuses on a specific set of cues: nonverbal facial expressions. Much of game theory assumes actors are anonymous with no clues about the identity of their partner. On the other hand, much of social exchange involves face-to-face interaction, and laboratory experiments demonstrate that such settings are very different from anonymous interaction. The investigators eliminate verbal communication and focus on a relatively simple device - stylized facial expressions - using it to explain how initial priors are formed about an unfamiliar exchange partner. The research uses standard game theoretic models and borrows from new concepts in evolutionary psychology to explain behavioral patterns that lead to consistent and predictable outcomes that deviate from those predicted by theory. Laboratory experiments are used to test a number of conjectures about social signaling, the importance of reputational priors and the development of reputations. This is collaborative research with Catherine C. Eckel of Virginia Polytechnic Institute and State University.
